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United States

Fiscal cliff talks going nowhere fast

Whether or not the US will avert the fiscal cliff or jump over it at the end of the year, one thing is already clear. In Washington’s deeply dysfunctional governing process, compromise is a four-letter word.

The media hype, incredulously headlining that there is "hope" after all, and the bounce by Asian stock markets after the news that the US government hasn't given up yet on trying to prevent the country from spiraling into a self-made recession, just goes to show how low expectations have become for Washington to accomplish even the most urgent tasks.

All it took to trigger this pre-holiday outbreak of joy was that Democratic President Barack Obama and Republican House Majority Leader John Boehner didn't end their talks over a fiscal cliff deal within a matter of minutes after starting them, but have managed to keep their conversation going for a few days now.

That's more than can be said of the Republicans who, on Thursday, shot down their own leader and his proposal to levy a tax on the super-rich - those earning more than $1 million dollars annually. Boehner was forced to cancel the vote in Congress after fierce opposition from right-leaning Republicans.

Following this internal revolt, a potential deal between Boehner and Obama looks even more unlikely, never mind that a real and lasting solution is all but assured and that even if one is reached, the important details have to be hammered out next year.

Looming recession

Much is at stake. The Congressional Budget Office (CBO) estimated earlier this year that failure to avert the fiscal cliff - the double whammy of massive tax hikes and massive spending cuts slated to go into effect January 1, 2013 - would reduce the US budget by $607 billion or four percent of GDP. As a result, predicted the CBO, the US would probably slip back into a recession in 2013.

ARCHIV - Das Kapitol in Washington, aufgenommen am Abend des 27.01.2010. Der US-Kongress ist gemäß Artikel I der amerikanischen Verfassung zuständig für die Gesetzgebung, den Haushalt sowie die Kontrolle von Präsident und Regierung. Sein Sitz ist das Kapitol in Washington. Bei der Kongresswahl am heutigen Dienstag (02.11.)dürften die Amerikaner ihrem Frust über die miese Konjunktur Luft machen. Der demokratischen Partei von Präsident Obama droht als Konsequenz eine herbe Schlappe. Foto: ALLISON SHELLEY +++(c) dpa - Bildfunk+++

Congress has become deeply divided and partisan

The road toward the fiscal cliff is long and was paved by Congress in 2010 with the extension of the temporary tax cuts of the Bush administration and by automatic budget cuts agreed in 2011. Without new legislation, the Bush-era tax cuts will expire at the same time the automatic budget cuts kick in come January 1.

"If Americans are about to jump over the fiscal cliff, it's because Congress has been totally dysfunctional in the last two to four years in terms of its essential function, which is to make a budget," Vincent Michelot, a US expert at Sciences Po university in Lyon, told DW.

"Neither a Super Committee or another commission were able to solve the budget deficit crisis and as a result we now have this ultimatum of December 31."

Fear of compromise

In a nutshell then, the fiscal cliff is what happens when Congress, incapable of reaching a deal on various financial bills, wads them all up into a giant paper ball and kicks that ball as far down the road as a possible.

Naturally this leads to the question why it is so difficult for Congress to reach any significant deal, be it over the fiscal cliff, Wall Street Reform, Health Care Reform, Immigration Reform or even to pass a budget.  

"The real problem for the fiscal cliff negotiations is for either party - but especially for the Republicans these days - that anyone who compromises faces the real risk that when they then try to get the nomination of the party again, somebody will run against them who is opposed to the compromise," Gregory Koger, a legislative scholar at the University of Miami, told DW.

Last month's election did nothing to change that line of thinking among the most crucial group of lawmakers to advance key legislation: House Republicans.

To be sure, the Republican Party was defeated at the presidential and senatorial level. But the House of Representatives presents a very different picture. House Republicans won the election of 2012, many with very large margins.

"So there is this interesting contrast between what's in the best interest of the national Republican Party if they ever want to win a presidential poll again or more statewide elections and what's in the interest of the individual members of the House who have these nice, secure seats as long as they are not dislodged by someone who is even more conservative than them," notes Koger.

Next test

An AR-15 style rifle is displayed at the Firing-Line indoor range and gun shop, Thursday, July 26, 2012 in Aurora, Colo. The Friday, July 20, 2012 massacre inside a crowded Colorado movie theater has prompted a sudden increase in gun sales and firearms training. Police said suspect James Holmes donned body armor and was armed with an AR-15 rifle, a shotgun and handguns during the attack. (Foto:Alex Brandon/AP/dapd).

Gun control legislation has been an intractable task

To vote for compromise with Democrats then for many House Republicans would literally be a career-ending move. That's why compromise in Washington politics has become a four-letter word.    

"It is very disappointing. It really highlights how our system struggles to compromise because we have politicians who don't find it in their interest to compromise," says Koger.

What's more, while the national Republican Party has begun to mull its stance over immigration and various voter groups after its election defeat, that hasn't happened yet on economic issues.        

"There was no regret whatsoever on the economic platform of the Republican Party," says Michelot. "Here the position has not changed whatsoever."

So even if a compromise on the fiscal cliff is reached and then hailed as the holiday miracle of the season, Washington's political logic has not changed. Compromise doesn't pay off. The next big test for this rule is already written on the wall: Gun control legislation.

DW.DE